Asian Egg Industry to Benefit from the Global Crisis

Morten Ernst, sales director for Sanovo Egg Group, explained the continuing strong growth of the egg industry in Asia and its potential to delegates at the recent International Egg Commission meeting. Terry Evans reports for ThePoultrySite.

In 2008, the Chinese government increased the central budget spend on agriculture by a massive 30 per cent, while India's government announced that it wants to increase capital in agriculture to 16 per cent of national income by 2012. So, it appears that the bulk of agriculture in Asia should benefit from the global crisis, Morten Ernst, sales director of the Sanovo Egg Group, told attendees at the International Egg Commission's annual conference in Vancouver, Canada earlier this month.

Over 60 per cent of the global population lives in Asia and more than 60 per cent of all eggs are laid there, with the annual total output for the region exceeding 40 million tonnes. However, fewer than four per cent are further processed into egg products. Excluding Japan, there are some 60 egg processing plants in the region, 21 of which produce egg powder. Japan, which has the highest consumption of egg products, has 85 plants of which only two produce dried products.

Although there are a few exceptions, generally speaking, there are no on-line egg production/processing facilities, most eggs being collected and delivered to processors in the conventional way. Again, Japan is the exception, as elsewhere most eggs are produced on small farms of less than a few thousand layers.

Large egg producers often own processing plants, while the others obtain their supplies via contracts with the larger producers. These have conventional cage units – typically with 5,000 or more birds per house – with some farms having between 30,000 to 100,000 birds in quite efficient westernised environments. However, it is estimated that just six to seven per cent of output is handled automatically.

*
"Of all the eggs produced [in Japan], a massive 50 per cent are eaten as egg products."

Large quantities of egg white are utilised throughout Asia, as it is an excellent binder used by the many surimi fish processing plants in Japan, Korea, China, Vietnam and Thailand. Imitation crabsticks or surimi is big business with about 600,000 tonnes eaten globally every year, these products being exported, particularly to the US and the European Union. However, when, as now, consumer purchasing power has been eroded, less surimi is processed, which means that less egg white is required.

Biscuits are popular in South-East Asia with whole egg an important ingredient. Egg noodles are in demand throughout the region, while an increasing number of bakeries are making puff cakes. The market for Swiss rolls and pound cakes is expanding rapidly. More than 10,000 industrial bakeries supply over 50,000 bakery shops in China, where bakery product consumption has grown from 1.5kg in the year 2000 to more than 5kg per person today.

Mayonnaise and salad dressings are popular in Japan, requiring large quantities of egg yolk. As consumption of yolk in Japan exceeds domestic supply, large quantities of both frozen and powdered yolk are imported every year. In 2008, Japan imported 2,800 tonnes of yolk powder and 5,500 tonnes of frozen yolks. The Japanese eat about 2kg of mayonnaise per person, equating to around 250,000 tonnes a year.

Japan is by far the dominant egg products producer and the largest market. However, as it relies on imports to satisfy the demand, it is not an exporter. Of all the eggs produced there, a massive 50 per cent are eaten as egg products.

Outside of Japan, egg products represent only 0.5 per cent of total egg consumption. "China, of course, weighs heavily in this calculation, as although there are 16 factories making egg products in there, their output accounts for no more than 0.1 per cent of production," Mr Ernst said.

While egg products are not eaten in India, this country produces in excess of 10,000 tonnes of powder a year, all of which is exported. However, the output from the three established egg processors in India will decline this year as a result of record high egg prices, stemming from feed cost increases.

"Excluding Japan, China and India, egg product consumption in the rest of Asia is around five per cent," he said. "This leaves room for a lot of growth before this region catches up with the western world!"

*
"With the exception of Japan, [there is expected to be] an increase in egg consumption across the board in Asia, with egg products poised to become a growing part of the total."

The continually expanding middle classes in the countries outside of Japan totalled more than 250 million people. "This segment is increasingly willing to take on debt, buy homes and cars, purchase luxury goods and eat out at restaurants," he said.

There were some one billion Chinese and Indians who are becoming wealthy enough to buy motorcycles, television and refrigerators. "This sector has been growing faster than in any other region of the world in the past two decades," he added.

The addition of an estimated 450 million or so people in Asia by 2015 will require about eight million tonnes more eggs – representing about 70 per cent of the global growth over the period from 2005 to 2015. With the exception of Japan, Mr Ernst envisages an increase in egg consumption across the board in Asia, with egg products poised to become a growing part of the total.

Total egg powder imports into the region in 2008 amounted to about 21,000 tonnes with Japan the dominant buyer, purchasing 3,215 tonnes of whole egg powder, 2,800 tonnes of yolk powder and 9,555 tonnes of egg white powder.

In recent years, the trade in egg product exports has been dominated by China and India, but since melamine was found in Chinese eggs last Autumn, many Asian countries have placed a ban on Chinese eggs and products, which has left India as the leading exporter in the region.

He predicts that the Asian egg industry will develop new egg pack sizes and exciting flavoured products that will appeal to the growing number of health-conscious consumers.

Enzymes will further enhance the demand for egg products. Mr Ernst foresees new blends and flavourings, while new ingredients will slow-down spoilage and extend the shelf-life of reduced-fat, light and fat-free egg products.

While lower feed prices, oil prices and speculator interest in food commodities should have a positive influence on the cost of production in Asia, for the remainder of this year and into 2010, fewer exports of food items containing eggs may slow overall demand for eggs in the domestic industrial food sectors.

Food chains throughout the region are reporting swift business as consumers trade down their eating-out habits from restaurants to fast-food outlets. Revenue in the latter in China has grown by 15 to 19 per cent every month since January.

Many children throughout Asia do not get adequate protein in their diet. "If governments would focus more on that problem, this would benefit the children as well as the egg industry. Government school lunch programmes aimed at providing protein would most certainly include eggs. Eggs would be a low-cost solution for a healthier youth, while at the same time helping egg consumption and stabilising egg prices," Mr Ernst concluded.